Offer Deferred Payment Without Risking Your Cash Flow

Offering deferred payment can help you win more B2B customers and close bigger deals. But it can also slow down your revenue and increase late payment risk if not managed properly. The longer you wait to get paid, the more pressure it puts on your cash flow, so the key is knowing when and how to offer it.

What is deferred payment and how does it work?

Deferred payment means letting your customer receive a product or service now, but pay for it later. This might take the form of:

• A Net 30, 60 or 90-day payment term on the invoice 
• Staggering payments via B2B instalment payments
• A flexible schedule offered through an arrangement like BNPL

The separation between the delivery of goods and the moment of payment — whether by days, weeks, or months – is often essential for B2B customers that rely on turning products or services into revenue in order to pay for them.

Deferred payment is increasingly common in B2B relationships, with one in six B2B suppliers now offering over two months to pay, but unless implemented carefully, it can drain your working capital and leave you out of pocket.

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What are the benefits of offering deferred payment to your customers?

Used strategically, deferred payment can give your business a competitive edge.

It helps you:

• Win more contracts by offering trade credit up front
• Build trust-based relationships with long-term clients
• Encourage larger orders from existing customers
• Support customers who are balancing their own cash flow

For many industries, this flexibility is standard, say when stocking up on inventory where the cost of goods is repaid once they are sold. Offering flexible payment terms can become the difference between landing a deal and losing it.

But to realise these benefits, you need to ensure that your business is set up not only to manage the delays in payment, but also any potential risks that come from deferring payment, from customer bankruptcy to simple human forgetfulness.

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What risks come with offering deferred payment terms?

While the upside is customer loyalty and potentially more sales, the downside is financial exposure.

Here’s what can go wrong:

• Late or missed payments put pressure on your cash reserves
• Extended invoice cycles increase admin and cash flow unpredictability
• Bad debt risks grow if a customer defaults

And the more customers you allow onto deferred payment terms, the harder it becomes to manage overall risk. With a full book of clients, many of whom may be on different payment cycles, it can be time consuming to track and manage outstanding trade receivables and easy to miss deadlines.

That’s why many businesses now turn to external solutions like embedded finance or BNPL partners to offer deferred payment without bearing the credit risk themselves.

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How does deferred payment compare to credit and BNPL?

While often used interchangeably, these terms have distinct meanings in a business context.

iwocaPay, for example, offers a BNPL-style solution for B2B, which helps sellers get paid instantly, while the customer can defer payment over 3 or 12 months. You offer flexibility without holding the credit exposure.

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Can I offer deferred payment without taking on credit risk?

Yes. With a B2B BNPL solution, the credit risk is handled by the provider, not your business, while you receive payment upfront. A partner like iwocaPay handles the underwriting and collections, insulating your business from the workload and exposure.

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When should your business offer a deferred payment option?

Offering deferred payment is not always the right move, but in the right situations, it can be a strategic advantage.

Consider offering deferred payment when:

• Your product or service is high-value or project-based
• Your competitors already offer flexible terms
• Your customer relationships are long-term and trustworthy
• You want to increase average order value or customer retention

However, it’s best to avoid offering deferred terms if:

• You’re already struggling with late payments or cash reserves
• You don’t have processes in place for credit checks or chasing invoices
• Your business model depends on quick cash cycles
• Working with large volumes of new customers where their ability to repay may be unclear.

Not every customer needs extended terms. Consider segmenting your offers to certain products or customers, or using a tool that allows customers to choose whether to defer, like iwocaPay’s Pay Later.

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How does deferred payment affect your accounting and cash flow?

Deferred payments impact both cash accounting and accrual accounting methods and both need to be managed carefully.

Impacts include:

• Increased accounts receivable on your balance sheet
• Delayed recognition of cash inflows (if cash-based)
• More complex reconciliation, especially if payment terms are inconsistent

You’ll also need to keep a close eye on working capital, since you’ll still be paying suppliers, staff and overheads while waiting to be paid. For this reason, it can be useful to standardise payment terms in line with your own suppliers – waiting 60 days to be paid when your own bills are due in 30 days is a recipe for financial headaches.

Automated invoicing, robust payment tracking, and clear terms on every agreement can help reduce the likelihood of payment days. But if you’re offering terms at scale, you can probably benefit from a system, or partner, to handle it.

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What does a deferred payment mean for my business cash flow?

It means longer gaps between delivery and payment, which can reduce available working capital. The impact depends on how many customers are on terms, how long they take to pay and when your own debts are due.

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How to reduce the risk of deferred payment agreements

While there is an inherent risk to offering deferred payments, there are clear steps you can take to reduce the potential impact on your business.

• Running company credit checks before agreeing to terms
• Setting clear expectations in a deferred payment agreement
• Incentivising early payment with prompt payment discounts
• Defining penalties or interest for late payments
• Using tools that automate reminders and collections
• Limiting deferred payment options to known, trusted clients

You can also offload the risk entirely by partnering with a BNPL provider that pays you upfront and manages repayment from your customer. iwocaPay does this by embedding a flexible payment link into your invoice or checkout ,where your customer can choose to defer, but you always get paid on time.

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Should you manage deferred payments in-house or outsource to a BNPL provider?

The question of whether to manage your own deferred payments or outsource them depends on your resources, risk appetite, and business model.

Managing in-house gives you control, but also means handling:

• Credit assessment
• Collections
• Cash flow gaps
• Legal follow-up in case of non-payment

Outsourcing transfers the risk and admin, and typically gives you faster payment, but may cost a small fee or require integration.

For fast-growing businesses without a finance team or credit control process, outsourcing through a provider like iwocaPay often makes more sense. You keep the benefit of flexibility without the operational burden.

Is a deferred payment agreement right for my industry?

Industries such as construction, retail and hospitality frequently use deferred payments to manage cash flow. If your customers expect flexible terms and your margins or cash reserves can’t absorb long delays, using a BNPL partner may offer a safer, more scalable option.

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Deferred payments without the risk

Deferred payments can help you attract more customers, build stronger relationships and grow revenue, but only if it’s structured to protect your cash flow.

Whether you manage it yourself or partner with a provider like iwocaPay, the goal is the same – giving your customers the flexibility they need, while keeping your finances strong and predictable.

With iwocaPay, you can:

• Get paid instantly, even if your customer defers, keeping cash flow on track
• Offer flexible 3 or 12-month terms to trade customers without taking on credit risk
• Send payment links by email, invoice or in person, ideal for remote and flexible sales
• Skip card processing fees with secure account-to-account payments
• Reduce admin and late payments with automated approvals and tracking
• Scale your payment process as your business grows with no extra systems or staff needed

To find out more about how iwocaPay can help you make the most of B2B BNPL for your business, check out our deferred payment options here.